China to control excessive credit flow into property sector

Despite reports of a property bubble in China, SGX-listed and Chinese developer CWG International plans to accelerate its expansion domestically

China will continue to implement policies aimed at preventing a property bubble in its cities.

With the red-hot property market picking up pace in February, China revealed plans to curb the rapid flow of bank credit into the property sector, reported Reuters, citing the country’s top economic planning agency.

“We will control the excessive flow of credit into the real estate sector,” said National Development and Reform Commission Head, He Lifeng, at the China Development Forum in Beijing.

He noted that the property market has witnessed the entry of large amounts of capital, which has pushed up property prices in first-tier and some second-tier cities, as well as costs for the real economy.

Earlier in the month, China’s central bank governor Zhou Xiaochuan said while the property cooling measures will slow mortgage growth to some extent, he still expects housing loans to continue its fast-paced growth.

Household mortgages made up 39 percent of new loans in China in 2016.

To prevent risks in the property sector, Vice Premier Zhang Gaoli said the government will continue to roll-out city-based policies aimed at reducing real estate inventories in smaller third- and fourth-tier cities.

“There could be property bubbles if we do not handle the situation well,” said Zhang.

Over the last few months, most local governments of cities that posted the sharpest price hikes have introduced a slew of restrictions on property ownership and acquisition.